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	Investing Basics

	by Doris Dobkins

I get a lot of requests to write articles on investing. Investing is a broad subject so what better way to start than with the BASICS. "What is investing?" is a simple question -- here's a simple answer. Investing is taking money and putting it somewhere, instead of spending it. In the earlier days, investing was putting money between your mattresses. Since then, investing has become much more COMPLICATED. But the best way to accumulate wealth is still through hard work, saving and common sense investing. Some think this is an old-fashioned method but in reality, it's the best way for those of us who are serious about investing.

THREE BASIC TYPES OF INVESTMENTS

OWNERSHIP INVESTMENTS

These are investments that represent ownership in a company, such as stocks and mutual funds. Anyone can learn to be a winner with the STOCK MARKET but it takes patience, time and a systematic investing plan. Sticking to proven funds over time as well as wisely managing your taxes and investment expenses are also key components of successful investing. Investing in REAL ESTATE is another great way to increase wealth. It is important though to become educated on how to manage costs and time your purchases and sales properly. Unless you know what you are doing, your risks are increased.

LENDING INVESTMENTS

This is where you lend your money to an organization or your local bank. This could be in the form of certificates of deposit or bonds. With these types of investments, the money that you are lending to an organization is being invested elsewhere. People looking for SAFER investments use lending investments. As a result, they usually earn SMALLER returns than those with ownership investments.

CASH EQUIVALENTS

This type of investment can easily be CONVERTED to cash such as money market mutual funds, checking and savings accounts, etc.

SAVINGS ARE KEY

No matter how much money you earn, save something each MONTH to invest. Do not use low income as an excuse. Don't wait for your next raise. Start now and start SMALL if you have to. Live below your means and save.

LOOK AT GROWTH

To reach the top of investing performances, choose your investments with the objective of making your money grow. With certificates of deposit and savings accounts, you'll LOSE MONEY due to taxes and inflation. Because of the wonder and power of compounded interest, a few extra percentage points annually will make a huge DIFFERENCE in your investments over time. So think long-term and think growth!

GET RID OF COMMISSIONS

Try to reduce or eliminate sales commissions when investing. Let ALL your money work for you. You have access to the best investments without paying a sales commission. No one knows the FUTURE and you might as well realize now that the perfect fund manager who will tell you when to buy and sell so you can have a 40% return each year doesn't exist.

GO IN FOR THE LONG HAUL

If the stock market drops, don't panic. Think LONG-TERM. This is a great time to buy more when stocks are "on sale". Throughout history, financial markets have always RECOVERED. The key is waiting out the market drops.

PUTTING YOUR MONEY TO WORK

While these are basic concepts for those interested in investing, they are a good beginning. So get started and enjoy your quest to financial freedom through the POWER of investing!

Doris Dobkins is a Money Saving Expert and publisher of the free weekly ezine $mart Money New$. To subscribe, send an email at . You may visit her website at www.creativefinances.com.

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